Market Shifts and New Emissions Test Causing Shift to Plug-In Hybrids

The lingering aftermath of the Volkswagen (VW) diesel emissions scandal is triggering a cascade of changes in the product plans of automakers globally. While a shift away from diesel engines was expected, in the last 6 months the emerging 48 V mild hybrid has also become collateral damage in both Europe and China.

Several large tier-one automotive suppliers have been proponents of 48 V mild hybrid applications in recent years. These include Continental, Bosch, BorgWarner, and Delphi Technologies. The additions of a belted starter generator (BSG), power electronics, and a 48 V battery are claimed to provide 70% of the fuel efficiency benefit of high voltage hybrid systems at approximately 30% of the cost. The first low volume 48 V applications launched in Europe in 2016 with several more arriving in the market by the end of 2017. In 2018, Fiat Chrysler Automobiles (FCA) launched three 48 V powertrain options in Jeep Wranglers and Ram 1500 pickup trucks.

If Not 48 V, Then What?

During the 2018 Center for Automotive Research Management Briefing Seminars, I spoke with Mary Gustanski, CTO of Delphi Technologies. As recently as CES in January 2018, Gustanski told me Delphi Technologies was busy quoting 48 V applications for many automakers around the world. Soon after that the message changed dramatically.

“We were completing a lot of quotes in China, everybody there said we’ve got to electrify, we’re going to use 48 V—we really love this,” said Gustanski. “Mid quote, they came back and said, no we really want you to quote a plug-in.”

Diesel Continues to Go Downhill

The European auto industry has long relied on diesel engines to help achieve mandated COemissions reductions. Since the VW scandal broke in September 2015, the industry had expected diesel to decline and was counting on 48 V mild hybrid systems to pick up the slack in reducing emissions.

Diesel sales have since collapsed far faster than anyone expected. For example, May 2018 diesel sales in the UK dropped 37.2% year-over-year. In Europe, the diesel market share dropped from 46% in February 2017 to 39% in 2018.

Compounding the issue has been the phase-in of the new World Light Duty Test Protocol (WLTP), a new harmonized emissions and efficiency test procedure that is being adopted in many regions, although notably not in the US. In addition to lab tests that more closely align with real-world operation, new cars are now subjected to actual on-road emissions tests. This has proved problematic for many models that had been optimized for the prior lab tests. These vehicles include both gas and diesel engines, and have been found to emit more in normal driving than was measured in the lab. As a result, the sales of a number of vehicles, such as the Audi SQ5 and the Volkswagen GTI, have been suspended until they can be updated.

What Does This Mean for the Automotive Markets?

After evaluating the results of WLTP tests, many automakers have found that 48 V mild hybrids will fall short of what had been projected to achieve the future COemissions targets for the powertrain mix they had planned. As a result, several automakers are adding plug-in hybrid models that emit less than the vehicles with 48 V technology.

In China, the government has extended incentives for plug-in vehicles (PEVs) and many cities have increased restrictions on the number of conventional internal combustion vehicles that can be registered. As a result, manufacturers in that market have also shifted product plans to increase the mix of PEVs.

For now, the North American market hasn’t seen a notable impact. However, FCA still seems to be on track to deploy additional 48 V mild hybrid systems across its mainstream lineup.